Among the major fruits processed for exports include pineapple, mango, banana, Soursop (guyabano), papaya, guava, calamansi (lime), dalandan (orange), jackfruit, tamarind, strawberry, raspberry, palm fruit (kaong) and coconut. These fruits can be processed into dried/glazed/crystallized fruits, vacuum fried, jams, jellies, marmalade, preserved/ prepared, and juices purees and concentrates.

Coconuts are generally processed into desiccated coconut, coconut chips, coconut water, coconut milk (liquid/powder) and copra meal, cake and pellets as animal feeds.

Commonly processed vegetables and root crops include ginger, onion, potato, cassava, ube (yam), cucumber, green peas, chick peas (garbanzos), soybeans, sweet corn, mushrooms, tomatoes, ampalaya and carrots. These vegetables are pickled or quick frozen, or made into sauces, pastes, catsup, soups and broth.

Majority of companies are micro-, small- and medium-sized enterprises.

Large firms such as Del Monte Philippines, Dole, T’boli Agro Industrial Development Corp., Ram Food Products, California Manufacturing Corp. and Sysu International Inc. are the key players for processed fruits and vegetables.

Market Opportunitys

Global Demand for Processed Philippine Fruits and Vegetables

• Processed fruits and vegetables exports show an increasing trend with an overall yearly growth of about 9% for the period 2003 to 2008.

• For the first six (6) months of 2009 alone, export proceeds amounted to US$173.7 Million and projected to increase to US$403.7 Million for the full year. (Source: BETP)

• Based on this trend, projections for the next five (5) years would yield an additional capacity requirement of processed fruits and vegetables to supply the projected annual demand of about 867,000 tons worth around US$637.55 Million.

Philippine Advantage

Natural resources

• Fresh fruits and vegetables are varied and abundant in the country and are generally cheaper during peak season.

• Other raw materials such as sugar, slat, coconut oil, corn oil, etc., are readily available locally.

Technology that supports the industry

• Process used is mostly manual and semi-mechanized systems using locally designed and fabricated production units.

• Some companies use full automated assembly line system usually in the production of dried mangoes, fruit purees fruit cocktails/mixed fruits and fruit juices.

Strong Support from Government/Industry Association

• Processed food that includes processed fruits and vegetables is given support by the government through designation of brand management teams to supervise the export promotion of the sector.

Presence of dynamic industry resources

-Philippine Food Processors and Exporters Organization, Inc. – focuses on planning, development and sourcing of raw materials, improvement of manufacturing efficiency and productivity, promotion of sound trade practices, among others.

-Philippine Exporters Confederation, Inc. – mandated to strengthen the country’s export industry through its export promotion and development programs.

Support industries/infrastructure

• Contract growing arrangement with farmers is encouraged to ensure continuous supply of raw materials and maximize the volume of production as well as support farmers’ growth.

• Availability of post harvest handling and storage facilities through the implementation of the Philippine National Cold Chain and Tramline Program y the Department of Agriculture;

• Three cold chain facilities have been established in three major producing areas, namely: Benguet in Northern Philippines (alternative routes Mt. Province-Benguet-Manila Line and Cagayan-Manila Line), Cebu in Central Philippines (with alternative routes Visayas-Inter-Island Connections) and Bukidnon in Southern Philippines (with alternative routes Mindanao-Cebu-Manila Line).

Ideal locations

• Most processing plants are located in the National Capital Region, Region IV, Region Vii, Region X and Region XI.

• The Cordillera Region and Mindanao (Davao City, Davao del Sur, Compostela Valley, Bukidnon and Misamis Oriental) are the top vegetable producers in the country supplying Manila, Southern Luzon and the Visayas.

• Dried mango production is concentrated in Cebu while banana chips are mostly in Davao and some parts of Mindanao. Region IV and XI are the largest coconut producing regions and have the most number of coconut processors in the country.

Human resources

• The country has a large and skilled labor pool, which is advantageous to investors with limited capital equipment investment.

Government Support

Enabling laws/policies

• Medium- Term Philippine Development Plan (MTPDP) 2004-2010 – development of about 300,000 hectares of new areas for high-value crops production by 2010

• Medium-Term Agricultural Development Plan (MTADP)

• Agricultural and Fisheries Modernization Act (AFMA) – duty free importation of all types of agricultural and fisheries inputs, equipment and machinery

• Philippine Export Development Plan 2008-2010

• Continuous provision of technical assistance from Food Development Center (FDC), the Bureau of Food and Drugs (BFAD), the Philippine Association of Food Technologist (PAFT) and the Academe.


R&D Support

• Research and Development support from the Department of Science and Technology (DOST), particularly the Philippine Council for Agriculture, Forestry and Natural Resources Research and Development (PCARRD) and Industrial Techonlogy and Development Institute (ITDI).

Incentives

Fiscal

• 4 to 8 years Income Tax Holiday (ITH)

• Special 5% tax rate on gross income after the lapse of ITH (for Eco-zone locators);

• Capital equipment incentives:

• -Tax and duty exemption on imported capital equipment (for Eco-zone locators);

-Duty-free importation of capital equipment (for BOI-registered firms under E.O. 528);

-Duty-free importation of capital equipment and inputs for primary processing (under R.A. 8435 or the Agriculture and fishery Modernization Act);

Exemption from 12% input VAT on allowable local purchase of goods and services e.g., communication charges (for Eco-zone locators);

Additional deduction for labor expense.


Non-fiscal

• Unrestricted use of consigned equipments;

• Exemption from wharfage dues and export tax, duty, impost and fees;

• Employment of foreign nationals;

• Special Investors Resident Visa

Cost of Doing Business

Estimated Investment Cost

• US$255-848 per ton of processed fruit/ vegetable

Salaries and wages (per day)

• NCR – Php 345.oo

• Regions/Provinces – Php 202.00-255.00

Rentals, lease, acquisition (per month)

• Commercial space lease – US$2.0-9.0/ sq.m.

• Office space rental – NCR: US$1-12/ sq.m.; Regional/Provincial: US$5-6/ sq.m.

• Within an economic zone – lease of lots – US$0.40/ sq.m

-lease of buildings – US$1.0/sq.m.

Business Permits

• License to Operate and Product Registration from the Bureau of Food and Drugs (BFAD);

• Environmental Compliance Certificate from Environmental Management Bureau (EMB);

• Registration of Incorporation from the Securities and Exchange Commission (SEC).